You could do receiving blankets,hooded towels,burp pads,bibs,baby blankets.For later months when it's cold you could make this wrap thing,can't remember what it's called,but has a hood,(i think) and the sides are shaped and fold across the baby and the bottom folds up .Supposedly stays put better than a blanket tha always slides off.Just take a trip to the fabric store and look thru the pattern books,you'll see what i'm talking about and more.
Kathi

Kathi has given you a ton of good ideas. Playtex makes a sippy cup you can put a monogrammed fabric insert into. Paci holders are also popular. They're made of ribbon, snaps and a mitten clip.
Susan

Make flannel receiving blankets 45" x 45". DS just had a baby and his MIL made them some and they love them! They are great for swaddling. Knit blankets leave too much wiggle room.
Kathy G in MI

I love the I Spy quilts that others have made over on the quilt forum (check them out), even a smaller version would be nice for when baby is older and going in the car or out visiting.....I agree that receiving blankets are nice but making something for when baby is a bit older wouldn't hurt either IMHO. Budster

You could make one of those pillows designed to go around a nursing mothers waist to support baby on, then it can double as a support for baby to sit up in, or lean across. DGD is nearly 2 and still uses hers to lay on while having a story read to her. You could also make the covers for them.

Covers to put in the cart at the store (keeps baby safe from everything from germs to rough edges).

When my kids were small I was given a "cover" to hold baby up in the high chair, it was shaped like a big T with long ties on the bottom end, they came up between the legs and tied at the back of the chair. (when kids got older I used it to "tie them in" big people chairs when we'd go some place with no high chair available.

Hobby Lobby is having a sale on Simplicity Patterns this week, 99 cents each, got several ideas in the book at WM, off to Hobby Lobby today, apparently WM no longer matches prices.

Have fun! Ellie